Investing using the Barron’s 400 index
Aaron Levitt of InvestorPlace.com writes about how investors can now invest based on how financial publication Barron’s picks stocks.
Levitt writes, “Considered to be one of the pillars of financial journalism, media outlet Barron’s has partnered with the fund distributor to create a new ETF based on their popular Barron’s 400 index. The index, which offers ‘growth at a reasonable price’ (or GARP) investing, has an impressive history, and could be the right new infusion for investor portfolios.
“According to pundits, one of the problems with standard indexing is that along with all the ‘good’ companies, you get the ‘bad’ ones as well, which drags on potentially market-beating returns.
“That’s where fundamental indexing — and the new Barron’s 400 ETF — comes in.
“Appearing weekly/daily in Barron’s print and online publications, BFOR’s index was launched in 2007 and uses a unique process to select stocks that have growth characteristics and are trading at reasonable prices … similar to what many Barron’s writers do for their weekly and daily columns.
“The 400-stock index is built on the back of the Dow Jones U.S. Total Stock Market Index, which itself contains about 6,000 stocks. Firms in this benchmark are then graded and ranked, based on 24 metrics of growth, value, profitability and cash flows. Companies that have a market cap below $3 billion, have a minimum three-month average dollar-trading volume of less than $2 million or are real estate investment trusts are kicked to the curb.”
Read more here.